The BEAM+ results for reducing Carbon dioxide equivalent (CO 2 eq emission level

The following electricity consumption forecasts for the commercial, hotel, and educational segments are based on rough estimations of the Electrical and Mechanical Services Department of HKSAR(EMSD) annual energy end-data tables using a simple regression approach (i.e., no other demographic factor is considered). Given that the values obtained are rough estimations, we conducted a sensitive analysis for validating the results . Tables 2.6a–2.6c summarize the forecasts where Low and High demands are (average - 3 standard deviations) and (average + 3 standard deviations), respectively. Details of the forecasted results are shown in Tables A3.

Table 2.6a: Electricity consumption forecasts and scenarios in 2012(TJ)

Segment Residential Commercial Education Hotel Scenarios and electricity consumption forecast Low demand Average demand High demand 43387 101609 6324 3579 45379 103692 6463 3909 47371 105775 6602 4238

Table 2.6b: Electricity consumption forecasts and scenarios in 2020 (TJ)

Segment Residential Commercial Education Hotel Scenarios and electricity consumption forecast Low demand Average demand High demand 52078 125705 7415 4048 54912 128668 7612 4517 57746 131632 7810 4986

Table 2.6c: Increases in electricity consumption from 2012 to 2020(TJ)

Segment Residential Commercial Education Hotel Scenarios and electricity consumption increases Low demand Average demand High demand 8691 24096 1090 468 9533 24977 1149 608 10376 25857 1208 747

2.4 Calculation steps and an example

In Tables 2.6a–2.6c, we have three scenarios with different consumption levels. These demand scenarios are used to calculate the reduction targets by the BEAM+ segments. Under each demand scenario, such as the Average demand, the total of all of these segmental reductions must equal 30021.5 (198111- 168089.5) TJ (reduction target).

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We used the following equations to describe the calculation of the % of BEAM+ buildings necessary to achieve our objective. We assume that the % values of the BEAM+ buildings are the same for both existing and new buildings to simplify the calculations. For each demand scenario,

Electricity consumption reduction (2020) = Elec. Consumption (2020) - Elec. Consumption (2012) = (Reduction by Existing Buildings + Reduction by New Buildings) × (% of BEAM+ Buildings) = ∑

( = [dot product of (Column 2 of Table 4b) and (Column 3 of Table 6a) + dot product of (Column 3 in Table 4b) and (Column 3 of Table 6c)] × (% of BEAM+ Buildings)

The following expression illustrates the calculation for the average demand scenario.

 % of BEAM+ Buildings = 88%

Using the same calculation method, we obtain 84% and 92% reductions in electricity consumptions for the Low and High demand scenarios, respectively. The electricity consumption reduction results are summarized in Table 2.7.

2.5 Results

Table 2.7 shows that the % range of the awarded buildings (including existing and new) ranges from 84% to 92%, with an average of 88%. Achieving the objective appears to be very difficult at this point since, even if the Government enforces some policies only related to BEAM+, we cannot expect that 88% of the existing and new buildings will obtain BEAM+ awards in 2020. Instead, let us consider whether or not BEAM+ can reduce the forecasted CO 2 eq level for 2020 to 2005 levels.

Table 2.7: Demand scenarios of electricity consumption reduction Scenario % of new and existing buildings to be awarded with BEAM+ to achieve the corresponding electricity consumption in 2020 Low demand 84 (163112 TJ in 2020) Average demand 88 (168089 TJ in 2020) High demand 92 (173066 TJ in 2020) Remarks: (1) % of existing buildings dominates the contributions of the electricity consumption reduction by BEAM+ (2) % of existing and new buildings can be different; the results are simplified to show feasibility

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2.6 CO 2 eq level reductions by BEAM+

In this subsection, we determine whether or not BEAM+ could

reduce the forecasted CO 2 eq level for 2020 to 2005 levels. Before the calculations, we make several assumptions:

(1) The local energy mix will change to 50 gas/50 coal in 2015 from 23 gas/77 coal in 2012 and nuclear power importation will remain unchanged. (2) The emission factors can be found in Figure A1 (in Appendix). We used factors of 850 g of CO 2 eq/kWh (Coal) and 530 g of CO 2 eq/kWh (gas), as obtained from http://thinkprogress.org/climate/2008/02/09/202347/about

those-two-studies-dissing-biofuels/?mobile=nc.

By converting CO 2 eq levels to electricity consumption levels, we can adopt the same calculation method in Section 2.2.3 to calculate the corresponding %.

Table 2.8: Scenario results of CO 2 eq emission reductions

Scenario % of new and existing BEAM+ buildings necessary to reduce CO 2 eq emission levels for 2020 to 2005 levels (28600 kt CO 2 eq)

Low demand 17% 5715 TJ reduction

Average demand 38% 12884 TJ reduction

High demand 57% 20051 TJ reduction

*The corresponding electricity demand is 51452 million kWh (185227 TJ) in 2020.

We can see from Table 2.8 that the result is positive, that is, by changing the local energy-mix to 50% gas/50% coal in 2015, BEAM+ can help HK decrease estimated 2020 CO 2 eq emission levels to 2005 levels.

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3. Peak demand reduction analysis

The key objectives of this section are to determine (1) whether or not HK needs to install extra power plants by 2020 and, if yes, (2) determine how BEAM+ can prevent HK from adding new power plants.

In HK, CLP Hong Kong (CLP) imports nuclear power from China and exports power to China. Hence, we can have two sets of peak demand scenarios: the local peak demand with nuclear power importation and the local peak demand without nuclear power importation.

3.1 Peak Deamand and Capacity in 2006-2011

3.1.1 No interconnection between CLP and HEC (Hong Kong Electric): CLP cannot meet the local peak demand by maintaining the local capacity (without importing nuclear power). Table 3.1 shows that the largest peak demand for CLP in 2010 was 6766 MW. If no nuclear power is imported from China, CLP may be unable to meet this peak demand considering that the resulting reserve capacity is 2.1% smaller than CLP’s record (6.9% in 2006), as shown in Table 3.2. Table 3.2 shows the overall peak demand, capacity, and reserve capacity from 2006 to 2011 with nuclear electricity power importation from China and electricity power exports to China.

Table 3.1: Local peak demand and reserve capacity in HK (2006–2011)

Year 2006 2007 2008

CLP peak (MW) 6,435 6,284 6,749

CLP Capacity (MW) CLP Reserve capacity % (1)(2) HEC peak (MW) HEC Capacity (MW) HEC Reserve capacity % (1) 6908 7.4 2597 3756 44.6 6908 9.9 2552 3756 47.2 6908 2.4 2589 3736 44.3 2009 6,389 6908 8.1 2537 3736 47.3 2010 6766 6908

2.1

2510 3736 48.8 2011 6702 6908 3.1 2498 3736 49.6

Hong Kong local peak demand 9032 8836 9338 8926 9276

9200 Reserve capacity (HK) 18.1 20.7 14.0 19.2 14.7 15.7

(1) Reserve capacity = (Capacity - Peak)/Peak × 100%; (2) does not include nuclear power importation

Table 3.2: CLP peak demand and reserve capacity with nuclear power importation

Year 2006 2007 2008 2009

CLP Peak (includes China peak)

CLP Capacity (includes nuclear)

CLP Reserve margin (%) 8,318 8,888 6.9 7,730 8,888 15.0 8,199 8,888 8.4 7,616 8,888 16.7 2010 7349 8888 20.9 2011 7798 8888 14.0

3.1.2. Interconnection between CLP and HEC: Assuming that no interconnection exists between CLP and HEC, we can determine that the corresponding total reserve margin for the highest historical peak demand (9338 MW in 2008) is around 14% (last row of Table 3.1). This value is greater than the CLP margin record in 2006 (6.9%), as shown in Table 3.2.

3.1.3. Reserve capacity considerations: In Figure 3.1, CLP indicates that its acceptable system reserve requirement is 31.4%. However, Table 3.2 shows that CLP worked safely within the reserve margin of only 6.9% in 2006. Normal reserve margins were between 6.9% and 20.9% in 2006–2011. Such a reserve margin range is

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significantly lower than that claimed by CLP. According to the International Energy Agency, the recommended reserve margin ranges from 20% to 35%. In fact, the levels required by different nations and regions differ. Hence, we can assume that the efficiency of HK’s power plants is excellent and the reserve capacity for HK’s

power plants can be around 20%. This value maybe used as the target reserve capacity for both utility companies of Hong Kong.

3.2 Peak demand and reserve capacity forecast 2020

3.2.1 Peak demand forecast :

By conducting simple regression analysis, we forecasted the peak demand of HK in 2020 (not including the exports for China’s peak period), as shown below.

Year Low peak* Average peak High peak*

2020 10947

11350

11753

* Low peak = (Average peak - 3 standard deviations); High peak = (Average peak + 3 standard deviations)

Figure 3.1: CLP’s Demand Profile and Installed Capacity (Source: LegCo 2012)

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Table 3.3: Peak demands (MW) addressed by different required reserve capacities

Reserve capacity (%) 40 35 30 25 20 15 11 7 CLP (local) 6908 4934 5117 5314 5526 5757 6007 6223 6456 HEC 3736 2669 2767 2874 2989 3113 3249 3366 3492 Peak demand CLP (Local + nuclear) 8888 HK(local) 10644

6349 6584 6837 7110 7407 7603 7884 8188 8515 8870

7729 8007 8307 9256 9589 9948 HK(local+nuclear) 12624 9017 9351 9711 10099 10520 10977 11373 11798

3.2.2. Capacity shortage:

Obviously, HK’s power companies cannot handle the forecasted peak demand in 2020 because all of the peak demand levels in Table 3.3 are lower than the Average peak demand forecast of 11350 MW. In particular, with an assumed acceptable reserve margin of 20%, the shortage in capacity would be incurred due to the fact that 11350 MW > 10520 MW.

3.2.3. Discussion:

Assuming that HK maintains 20% reserve margins, HK needs extra power plants if HK does not intend to reduce its peak demand. However, if the acceptable reserve margin is 11% (or 7%), new power plants are not necessary to meet the Average peak demand forecast of 11350 MW (or 11753 MW High peak demand forecast).

3.2.4. Summary:

If HK does not intend to do address the interconnection between HEC and CLP or implement policies to reduce peak demands, HK must add new power plants by 2020 to meet the proper reserve margin of 20%. If HK implements an interconnection between HEC and CLP with the corresponding trading scheme, HK may not need to add new power plants in 2020 to satisfy the reserve margin of 11% (Average forecast) or 7% (upper limit). Note that from Table 3.2, the lowest reserve margin of CLP is 6.9% in 2006. Based on this record, HK probably does not need to add new power plants.

3.3 No interconnection scenarios

In this subsection, we determine whether or not CLP and HEC can handle their peak demands in 2020 individually (no interconnection).

3.3.1. CLP:

The CLP local peak demand forecast (MW) obtained using simple regression is shown below.

Year Low peak Average peak

High peak 2020 7966 8205 8444 From Table 3.2, in 2006, CLP can handle the peak demand of 8318 MW (CLP in HK + China), which is higher than the Average peak demand forecast of 8205 MW (CLP in HK only) in 2020, but not the High peak demand forecast of 8444 MW. On the average, CLP does not need to add new power plants if CLP keeps

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importing nuclear power from China and does not export to China. The case for the High peak demand scenario or the 20% reserve margin is discussed in Section 3.3.

3.3.2. HEC:

The HEC peak demand forecast (MW) obtained using simple regression is shown below.

Year 2020 Low peak 2952 Average peak 3145 High peak 3338

HEC, having an 18% reserve capacity, can handle the 3166 MW peak demand, which is greater than the Average peak demand forecast in 2020. Therefore, when the reserve capacity is smaller than 18%, HEC does not need new power plants in 2020. The case for the High peak demand scenario and/or 20% reserve capacity is discussed in Section 3.3.

3.3.3 Summary:

Based on the historical performance of 15% reserve capacity, on the average, CLP and HEC do not need extra generators in 2020. However, for the appropriate 20% reserve capacity level, we may need further investigations. Moreover, considering that we are studying reserve capacities, the High peak demand scenarios would be used to achieve more conservative conclusions because electricity security is the most important energy policy in HK. In the next section, we determine whether or not BEAM+ can help HK under the conditions of 20% reserve capacity and High peak demand forecast.

3.3 BEAM+ for reducing the High peak demand

For the High peak demand scenario, both CLP and HEC show a capacity less than the recommended 20% reserve capacity. In this subsection, we determine whether or not BEAM+ can help reduce the High peak demand so that HK does not need new power plants in 2020. Note that BEAM+ is not implied as the unique solution here.

Considering that the peak demand is obtained from the different segments of the urban city activities, we have the following assumptions for using BEAM+:

(1)

(2)

(3) The segmental (of BEAM+) proportion of the peak demand contribution follows the proportion of the segmental electricity consumption. We use all of the HK electricity consumption data to obtain these segment proportions because we do not have separate data from CLP and HEC. According to the EMSD statistics, 90% of the peak demand is contributed by the Building segment and 10% is contributed by the Industrial and Transport segments. Given that we are studying capacity issues, we need more conservative results. Hence, we further seek to determine the lowest score scenario (BEAM+ buildings that obtained the least scores from the EU2 section), as summarized in Table 3.4.

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(4) (5)

Table 3.4: Summary of the lowest BEAM+ scores from Tables A1 and A2 Segment New building (Eu2 = 1) Existing (Eu2 = 1) Residential 0.08 0.08 Commercial 0.15 0.15 Hotel 0.15 0.1

Education 0.08 0.08 About 90% of the peak demand is assumed to be contributed by the four segments above. The contributions of the non-residential (Commercial, Hotel, and Education) and residential segment are most likely swapped with each other. Hence, we consider four peak demand contribution scenarios, as described in Table 3.5.

Table 3.5: Summary of the peak demand contribution scenarios Scenario Residential (%) Non-Residential (%) R10/90 10 90 R20/80 20 80 R30/70 30 70

R40/60 40 60 Table 3.6 lists the results of a calculation example of the expected % reduction in peak demand based on the different peak demand contribution scenarios. In this table, 40% of the peak demand is contributed by the residential segment. Based on these data, we can calculate the % peak demand of the nonresidential segments and the corresponding expected % reduction in peak demand, as shown in Table 3.6. About 40% of the contribution by the residential segment must be changed to obtain different scenario settings and the expected % reduction for further calculations.

Table 3.6: Expected % reduction in peak demand based on the peak demand contribution scenarios

Segments

Residential (R ) Commercial (C ) Hotel (H) Education (E) 2020 energy consumption (1)

54912.319 128668.527 4516.708 7612.458 Peak demand contribution (%)

40 (2) 54.831 (3) 1.925 (3)

3.244 (3)

Sum of C, H, and 140797.693 60 expected % E reduction (1) From Table A3b; (2) To be changed according to Table 3.5 for the different scenarios; (3) Calculation example (E): (7612.458/140797.693)x 60% (4) Dot product of the corresponding columns and the third column divided by 100 New building Eu2 = 1

0.08 0.15 0.15

0.08 0.120 (4) Existing building Eu2 = 1

0.08 0.15 0.1

0.08 0.119 (4)

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3.3.1 Scenario of CLP with nuclear import (no interconnection)

In this subsection, we calculate the % of new and existing buildings that should obtain a BEAM+ award with EU2 = 1 to achieve the peak demand reduction target according to a reserve margin of 15% or 20% for the forecasted CLP local peak demand of 8444 MW.

For a 15% reserve margin, CLP can handle a peak demand of 7729 MW. About 8.5% of 8444 MW (1 - 7729 MW/8444 MW) will be contributed by new buildings and the remaining 91.5% (100% - 8.5%) will be contributed by existing buildings. Hence, we can calculate the expected demand reduction considering the 90% peak demand contributed by the buildings. The details and the results are shown in Table 3.7. In the calculation example, we need to solve 8444 MW –8444 MW × 90% × (expected peak demand reduction with different % of BEAM+ buildings) = 7729 MW. For the 40/60 scenario, the “expected peak demand reduction with different % of the BEAM+ buildings” = [91.5% × 0.119 × (% of BEAM+ existing buildings) + 8.5% × 0.120 × (% of BEAM+ new buildings)]. The values “0.119” and “0.120” are calculated in Table 3.6. The resulting % of the BEAM+ buildings is 79%.

Table 3.7: % of the buildings with a BEAM+ with EU2 = 1 necessary to reduce the 2020 forecasted high peak demand of 8444 MW to the corresponding reserve capacity with the existing capacity (8888 MW of CLP) Scenarios in Table 3.5 15% reserve margin (7729 MW 20% reserve margin (7407 MW) peak demand capacity) R10/90 68 98.6 R20/80 71.4 Infeasible R30/70 75 Infeasible R40/60 79* infeasible

Based on the results in Table 3.7, CLP does not need to add more turbines to meet the 15% reserve margin if

the % of e BEAM+ buildings in 2020 is between 68% and 79%. However, new turbines are necessary to meet the 20% reserve margin. The historical reserve margins should be range from 6.9% to 20.9%.

3.3.2. Scenario of HEC (no interconnection)

Similarly, we can obtain the following values for HEC.

Table 3.8: % of the buildings with a BEAM+ with EU2 = 1 necessary to reduce the 2020 forecasted peak demand of 3338 MW to the corresponding reserve margins with the existing capacity (3736 MW of HEC) Scenarios in Table 3.5 15% reserve margin (3249 MW 20% reserve margin (3113 MW) peak demand capacity) R10/90 21.4 54.2 R20/80 22.5 56.8 R30/70 23.6 59.8 R40/60 24.9 63.0

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HEC does not need to add more turbines if the % of the BEAM+ buildings in 2020 is between 21.4% and 24.9%.

3.3.3. Scenario of using BEAM+ and interconnection (no nuclear power)

Infeasible

3.3.4. Scenario of using BEAM+ and interconnection with nuclear power importation

In this subsection, we determine whether or not BEAM+ can help reduce the peak demand such that HK does not need new power plants in 2020 when using nuclear power. Again, BEAM+ is not implied to be the unique solution here. Following the same procedure in Section 3.3.1, we obtain the results shown in Table 3.9.

Table 3.9: % of the buildings with a BEAM+ with EU2 = 1 necessary to reduce the 2020 forecasted peak demand of 11752 MW to the corresponding reserve margins with the existing capacity (12624 MW of HEC + CLP with nuclear power importation) Scenarios in Table 3.5 15% reserve margin (10978 MW 20% reserve margin peak demand capacity) (10520 MW) R10/90 53.0 84.2 R20/80 55.6 88.4 R30/70 58.5 93 R40/60 61.7 98

3.3.5. Summary

At the 20% reserve capacity level, on the average, the result of applying BEAM+ is negative. However, at the 15% reserve capacity level, the result is positive. HK’s historical reserve capacity level was around 15% in 2010 and 2011.

3.4 BEAM+ for reducing the Average peak demand

Given that the results in Table 3.9 are obtained for the High peak demand forecast and HK’s historical reserve capacity levels were around 15% in 2010 and 2011, determining the BEAM+ results for Average peak demand forecast is worthwhile. Here, we determine whether or not BEAM+ can help reduce the Average peak demand (forecast) so that HK does not need to implement new power plants in 2020. Following the same procedures in Section 3.2, we obtain the following results shown in Table 3.10.

Table 3.10: Required % of BEAM+ buildings for the different scenarios CLP (with nuclear) HEC CLP (with nuclear) + HEC Scenario 15% RC* 20% RC 15% RC 20% RC 15% RC 20% RC R10/90 47% 78% n.a. 8.2% 26% 58% R20/80 49% 82% n.a. 8.6% 27% 61% R30/70 51% 86% n.a. 9.0% 29% 65% R40/60 54% 91% n.a. 9.5% 30% 68% * RC = reserve capacity; n.a. = not applicable

3.5 Summary and discussions

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Based on the results shown in Tables 3.7–3.10, BEAM+ would be a feasible solution for improving electricity consumption when (1) the reserve capacity is between 15% and 20%, which is the historical record in HK, and (2) the peak demand forecast is between the Average and High peak demand forecasts. If we take the average of the scenario results of each table (Tables 3.7–3.10), we obtain the summary shown in Table 3.11.

Table 3.11: Summary of the required BEAM+ building for reducing peak demand 15% RC 20% RC Average Peak High Peak Average Peak High Peak CLP (with nuclear) 50% 73.5% 84.5% Infeasible HEC n.a. 23% 8.8% 58.6% CLP (with nuclear) + HEC 28% 57% 72% 91%

4. Concluding Remarks

The BEAM+ website mentions that private and public sector buildings make up around 75% and 25% of all buildings assessed, respectively. BEAM awards over 199 landmark properties in HK, accounting for more than 37% of all commercial spaces and around 28% of all dwellings.

From the BEAM+ for peak demand analyses, if HK retains its existing reserve capacity level (15%), BEAM+ would be a promising tool for reducing the peak demand and no additional power plants will be required in 2020. The overall required % of BEAM+ buildings would be between 28% and 57%. Here, we must emphasize that all BEAM+ buildings must obtain scores from EU2.

Based on the scenario assumptions, we need to ensure that adequate interconnections exist between CLP and HEC and that CLP and HEC will cooperate with each other during the peak demand period.

In terms of CO 2 eq emissions reductions, on CO 2 eq emission levels in 2020 to 2005 levels. the average, only 38% BEAM+ buildings is required to reduce

And because the study is using the most conservative assumptions, it is very likely that the targets suggested above will achieve higher CO 2 eq emissions the above positive results: reduction. The following policies can be considered to achieve

(a) (b) (c) (d) (e) Set 40% and 80% as the green building target by 2020 and 2030. All government buildings shall achieve BEAM+ Silver reward or above by 2020. The property tax reduction and GFA concession for BEAM+ buildings in a progressive rate. Lower stamp duty when BEAM+ property transactions are made. Introduce Energy Efficiency Obligation in the Scheme of Control Agreement, which require power companies provide energy-saving measures to their customers.

(f) Improve the interconnectivity between CLP and HEC.

There are many different advocacies to boost Hong Kong green building development. Our suggestions share some similarities to others. The key of the study is actually to ask for a holistic plan which combined the green building development together with our energy plan. BEAM+ was a missing puzzle in Hong Kong electricity market. We truly wish this study will inspire our society to explore the role of green building in our electricity market.

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